South African business owners have been – for four consecutive years - most concerned about a lack of availability of a skilled workforce and rate this factor as their major constraint (34%) to business growth.

That’s according to Grant Thornton’s 2010 International Business Report’s (IBR) findings, relating key constraints on ability to expand the business. The IBR is an international survey of over 7400 CEOs and other senior executives focusing on opinions of medium to large privately held businesses (PHBs).

This figure, however, is lower than 2009’s 41% which indicates a clear improvement in South African privately held business owners’ perception of the nation’s workforce and regarding the availability of skills.

By contrast, globally, a shortage of orders and reduced demand for products has yet again proven to be the major constraint (39%). This is less of an issue than in 2005 when 49% of business owners globally rated this as the most important issue.

Leonard Brehm, National Chairman of Grant Thornton South Africa says, “South African PHBs are feeling a little less constrained by a lack of skilled workforce, but this is probably due to the recession causing a slightly reduced demand for skills. By contrast, global PHBs see this as a much less important issue.”

Yet, South Africa concurs with the global trend that overregulation and red tape is the second biggest restrictor to business expansion (all at 32%). Worldwide, concern about regulations and red tape increased by 2% compared to 2009’s findings (30%).

Overall, the IBR 2010 data for business constraints indicates that globally businesses are more optimistic with the majority of countries less concerned about constraints affecting business expansion. “This improvement is a clear sign of an upturn,” says Brehm. “With worldwide businesses feeling less constrained than 12 months ago by a variety of factors, PHB owners’ focus for the year ahead will shift to long term growth and stability.”

Thailand and Russia were the only countries that are more pessimistic this year, than they were in 2009, considering all constraints.

Brehm warns, however that, business owners need to be cautious. “An upturn in the economy is a danger period for PHB owners, with the requirement for additional working capital sure to impact organisations in terms of cash flow,” adds Brehm. “Recessions naturally release cash flow because everyone reduces inventories. Once the economy turns and demand increases, this process reverses and businesses can be caught short. Now, more than ever, is the time to be careful with cash.”